Terrence Donohoe (plaintiff) alleged that Consolidated Operating & Production Corporation (COPCO) (defendant) had fraudulently lured Donohoe into an investment. The investment involved drilling for oil in land that COPCO knew contained no oil. Donohoe joined COPCO’s principals and shareholders, Jack Nortman, Morando Berrettini, and Dennis Bridges, as defendants. Nortman and Berrettini had conducted a thorough check of Bridges’s background and expertise and had also regularly checked up on Bridges’s work. Additionally, Nortman and Berrettini had invested over $100,000 of their own personal funds into the venture. During the course of litigation, Bridges declared bankruptcy, such that judgments against Bridges contained little value. Nortman, Berrettini, and COPCO were left as the only defendants. Donohoe’s complaint argued for liability on various theories, including violation of the antifraud and registration requirements of federal securities laws. The district court granted summary judgment in favor of Nortman, Berrettini, and COPCO. However, on appeal, the court of appeals noted that the district court’s opinion had failed to address the argument that Nortman and Berrettini could be liable for Bridges’s fraudulent behavior under a control-person theory. The case was remanded to the district court for discussion of this issue. The district court again granted summary judgment for Nortman and Berrettini, finding that the defendants had met the good-faith defense for controlling persons. Donohoe appealed again.